Jakarta (ANTARA News) – The investment climate in Indonesia in the last two years has been favorable following investment reforms and an improved business climate. As a result, the government is optimistic of achieving its investment target this year.
Its optimism is based on its success last year when it exceeded its target. The countrys realization of investment in 2015 reached some Rp540 trillion, up 16.6 percent from that in 2014, surpassing the Capital Investment Coordinating Boards (BKPMs) target set at Rp519.5 trillion.
After all, investors confidence in Indonesia and its business climate has been improving, leading to a sense of optimism that the government will be able to achieve this years investment projection.
The BKPM has set a target to attract Rp594.8 trillion worth of investment this year, and Rp678.8 trillion next year. BKPM Chief Thomas Lembong, popularly called Tom, said the investors confidence in Indonesias investment climate is high.
This was reflected in the high number of business leaders who participated in the Forbes Global CEO Conference. “As of now, the investors sentiment is very good. After carrying out reforms and an improvement in the investment climate, the government was finally able to enhance investors trust,” Thomas pointed out in Jakarta on Wednesday.
The governments efforts to introduce a series of 14 economic policy packages since September last year and a campaign to intensively promote investment opportunities abroad has led to increased foreign investors interest, making Indonesia the second-best investment destination.
The policy package is aimed at encouraging people all over Indonesia to expand their economic activities efficiently and to connect them to the rest of the world. In the 14th economic policy package, the government has come up with a roadmap.
This roadmap will enable businesses to expand in a better way.
“Economic reforms will continue and will have a fundamental impact on Indonesias progress,” Thomas asserted. These reforms received a positive response from businesspeople taking part in the Forbes Global CEO Conference.
Leaders of various companies who attended the Forbes Global CEO Conference appreciated the breakthrough steps taken by the government to attract investments.
One of these steps is the tax amnesty program which has been proving to be a success in repatriating funds from abroad.
In the first three months period (July-September 2016), the government earned more than Rp97 trillion in penalties with Rp137 trillion worth of assets repatriated from abroad and Rp3,500 trillion worth of taxable assets, previously not reported, being declared.
CEO Wanda Group Jianlin Wangyang who won the Malcolm S. Forbes lifetime achievement award appreciated the Indonesian governments efforts to improve the investment climate.
The governments latest economic policy package is expected to lead to more investment in the e-commerce sector. It outlines a roadmap for the purpose and is expected to induce a sense of certainty in business besides facilitating the e-commerce industry.
In terms of foreign investor countries, Singapore was recorded as being the largest investor in Indonesia in 2015. Singapores investment reached US$5.9 billion, followed by Malaysia (US$3.1 billion), Japan (US$2.9 billion), the Netherlands (US$1.3 billion), and South Korea (US$1.2 billion).
China is ranked ninth, while Hong Kong was sixth, he added. China has been in the spotlight because it is one of the countries expected to make major investments in Indonesia.
If China and Hong Kong are taken together, the total is around US$1.5 billion, making the duo the fourth major investor.
Regarding investment from Europe, the BKPM noted that Europes investment potential was quite huge but Indonesia was yet to optimally benefit from it. However, investment from Europe in Indonesia did show an upwardly trend.
Based on the BKPM data, the investment commitments from European countries in January 2016 reached Rp6.53 trillion, almost 10 times higher than Rp670 billion recorded in the same period in the previous year.
The realization of investment from Europe reached Rp149.8 trillion during the period between 2010 and 2015. The increase in investment commitments from Europe continued to show a positive trend in 2015, with a 16 percent hike reflected in Rp37.3 trillion worth of investment, compared to Rp32.2 trillion in 2014.
The investment in 2016 is expected to boost the production sector and increase exports.
Therefore, the government has set a foreign investment target of Rp386.4 trillion in 2016, accounting for 53.9 percent of the total Rp594.8 trillion investment plan.